Insurance premium tax (IPT) receipts have reached £4.42 billion in the first five months of the 2024/25 fiscal year, according to data released by HMRC.
This represents a 13% increase from the £3.92 billion collected during the same period in the previous year. In August 2024 alone, £1.35 billion was collected, up from £1.16 billion in August 2023.
Cara Spinks (pictured above), head of life & health at Broadstone, remarked that rising insurance premiums are contributing to this growth, with IPT continuing to be a significant source of revenue for the Treasury.
“Individuals purchasing health insurance products such as health cash plans and private medical insurance (PMI) are incurring this additional cost as they increasingly look to private healthcare to support their own health and wellbeing,” Spinks said.
Spinks also highlighted that while individuals are bearing some of the costs, much of the demand for health insurance products is driven by employers. Companies are expanding employee coverage to address health issues and mitigate long-term sickness, particularly as the NHS faces growing pressures.
“Affordable access to the private healthcare market, particularly to more preventative forms of treatment such as health screenings, should be a key strategy for the government to alleviate pressure on the NHS and maximise economic growth by keeping people healthy and in work,” she said.
She suggested that improving access to private healthcare could be a crucial strategy for the government to alleviate strain on the NHS, enabling economic growth by keeping more people healthy and in work.
Reducing or removing IPT for health insurance products, Spinks added, may not be on the government's immediate agenda for the autumn budget, but it should be seriously considered to encourage businesses to invest in the long-term health of their workforce and reduce the burden on the NHS.
Earlier this month, the British Insurance Brokers’ Association (BIBA) called on the government to lower the standard rate of IPT from 12% to 10% in its submission ahead of the Autumn Budget. BIBA argued that reducing the tax would make insurance more affordable, particularly in light of increasing costs across various sectors.
BIBA also proposed that certain insurance products be exempted from IPT entirely. These include policies covering multi-occupancy residential buildings that require or are undergoing cladding remediation, as well as cyber insurance products, which BIBA believes are crucial for encouraging greater uptake among small and medium-sized enterprises (SMEs).
BIBA's call for IPT exemptions for cyber insurance is aimed at helping SMEs safeguard against the growing risk of cyberattacks, which have become more prevalent in recent years.
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